Malaysia champions new focus of stock exchange

Bursa Malaysia Bhd. Chief Executive Tajuddin Atan said the exchange will focus on turning domestic companies into regional champions after spending the past five years boosting corporate governance and investor protection.

The Southeast Asian nation will promote companies in industries such as palm oil, Islamic finance and oil and gas, after putting in place governance rules that match standards in Singapore and Thailand, Tajuddin said. He declined to specify what steps the exchange would take.

“We have to start moving outside our borders,” he said in an interview at the bourse’s headquarters in Kuala Lumpur yesterday. “Now the challenge for us is to liberalize the market and start profiling what we have.”

Bursa Malaysia, which operates Southeast Asia’s third largest stock market, is seeking to lure investors to a nation that was the world’s fifth-largest destination for initial public offerings last year. Malayan Banking Bhd. is the country’s sole entry in the world’s 500 biggest companies by value with a market capitalization of $24 billion, according to data compiled by Bloomberg.

Two of Asia’s four biggest first-time share sales in 2012 came from Malaysia, as the nation surpassed financial hubs including London and Singapore with 21.2 billion ringgit ($6.8 billion) raised, data compiled by Bloomberg show. Felda Global Ventures Holdings Bhd., a Kuala Lumpur-based palm oil producer, lured $3.3 billion, making it the world’s third-biggest IPO last year, the data show.

Expanded Reach

Malaysia boasts the biggest Islamic debt market and the most liquid crude palm-oil futures contract in the world. There is scope for more of the nation’s companies to become regional champions, Tajuddin said.

Malayan Banking and CIMB Group Holdings Bhd., the nation’s top two lenders by assets, have expanded their reach in Asia in the past two years. Malayan Banking bought Kim Eng Holdings Ltd., a Singapore-based securities and investment-banking group, in 2011, while CIMB acquired Royal Bank of Scotland Group Plc’s Asian assets last year. Malaysia is also home to Sime Darby Bhd., the world’s largest listed palm oil producer by acreage, which has a market value of $17.9 billion.

“Bursa has the platform to tie up with all the Southeast Asian exchanges so they can use that to promote the smaller names within the region first,” Lye Thim Loong, who helps manage the equivalent of $500 million at Libra Invest Bhd., said by phone in Kuala Lumpur yesterday. “They can organize and actually bring these companies to the community there. But those companies also have to be proactive and must spend money to do investor relations.”